DuPont ‘Fraud’ in Monsanto Seed Case Unsealed by Judge

By Jack Kaskey and Susan Decker -
Nov 30, 2012

DuPont Co. (DD), the most valuable U.S.
chemical maker, lied to a federal court and investors about its
right to use Monsanto Co. seed technology as a central part of
its defense in a patent lawsuit, a judge ruled.

DuPont “knowingly perpetrated a fraud against the court,”
according to a Nov. 16 order by U.S. District Judge Richard Webber unsealing sanctions he levied last December that limited
the company’s defenses in the lawsuit brought by Monsanto. The
two companies are the largest in the $34 billion commercial seed
market.

E-mails from DuPont executives and lawyers show they knew
the company didn’t have an agreement allowing it to combine
Monsanto’s Roundup Ready soybeans with a second trait, while
telling the court and public for years that it had such a right,
Webber ruled. Because the sanction order was sealed, DuPont has
“been able to continue their public relations spin,” the judge
wrote.

“The public is entitled to a full disclosure of the
defendants’ fraud, which unduly delayed resolution of this
litigation,” Webber wrote in his order. “Possible
embarrassment or discomfort is not enough to justify sealing
court records.”

Webber will decide whether to uphold or increase the $1
billion award to Monsanto made in the patent case by a federal
jury on Aug. 1 after 40 minutes of deliberations. He’ll also
preside in an October trial over DuPont’s claims that Monsanto
illegally extended its market dominance in genetically modified
crops.

‘Pretty Outrageous’

DuPont today asked Webber to unseal more documents that
show “we told the truth,” Thomas L. Sager, DuPont general
counsel, said in a statement. “The sanctions ruling is dead
wrong,” he said.

DuPont has probably damaged its relationship with the
judge, perhaps to the point he may triple the jury award, said
Ronald A. Cass, dean emeritus of the Boston University School of
Law. The judge can increase the award based on the jury’s
finding that the infringement was intentional.

“I wouldn’t put a lot of money on DuPont winning the
antitrust claim, either,” Cass, who is also president of Cass &
Associates, a legal consultancy, said by phone yesterday. “What
DuPont did was pretty outrageous and put Monsanto in a difficult
position because they were being raked over the coals in
public.”

‘A Mockery’

Monsanto sued DuPont in 2009, claiming the company was
infringing a patent for seeds that are genetically modified to
tolerate application of the herbicide Roundup. Monsanto argued
that DuPont wasn’t allowed to combine its own seed trait with
Monsanto’s Roundup Ready trait.

DuPont in turn accused Monsanto of trying to monopolize the
seed market. Webber split the dispute, with the patent issue
tried first and the antitrust case scheduled for trial next
year.

After ruling in December that DuPont had misled the court,
Webber prevented the company from arguing to the jury that it
acted within the terms of a 2002 licensing contract. The judge
also ordered DuPont to pay some of Monsanto’s legal bills.

“Defendants show no remorse for their wrongdoing, but to
compound the seriousness of their behavior, insist on
maintaining their bogus arguments, despite the overwhelming
evidence that those arguments are clearly contradicted by the
facts,” Webber wrote in his order sanctioning DuPont.
“Defendants have made a mockery of this proceeding.”

Accuracy Defended

Webber, in his November order, said he provided the
Department of Justice’s antitrust division with a copy of his
fraud findings in February. The department announced this month
it dropped its investigation into possible anti-competitive
practices in the seed industry.

“The DOJ decision may not bode well for DuPont’s remaining
antitrust claims against Monsanto,” Greg Neppl, a Washington-
based antitrust partner with Foley & Lardner LLP, said in an e-
mail.

“DuPont, its employees, and its counsel throughout this
litigation have adhered to the highest ethical standards,”
DuPont said in an earlier statement. “All of the company’s
representations to the court or the public regarding its claims
and defenses in this case have been accurate.”

Webber’s orders “speak for themselves,” said Kelli Powers, a Monsanto spokeswoman, who declined to comment further.

Federal Findings

A federal jury in Monsanto’s hometown of St. Louis found
DuPont willfully infringed a Monsanto patent by making soybeans
that combined the Roundup Ready trait with a similar DuPont
technology known as GAT. In the December 2011 order that is now
unsealed, the judge threw out the heart of DuPont’s defense,
preventing the company from arguing that the combination was
allowed under terms of the 2002 agreement.

Webber said he sealed the document to avoid publicity that
would taint the pool of jurors who would hear the case.
Following the verdict, Monsanto asked the judge to make the
order public, saying DuPont has continued to make false public
statements.

‘Perpetuate Fraud’

DuPont’s argument that Monsanto is trying to make the order
public out of spite is “ironic,” he said. The evidence showed
“a calculated, strategic effort by defendants to demonize
Monsanto and to portray themselves as the seed industry’s David
to Monsanto’s Goliath.”

DuPont has asked Webber to put the antitrust case on hold
and issue a final judgment on the patent verdict so it can
immediately be appealed. After Webber’s sanctions, DuPont wants
to get the case before the U.S. Court of Appeals for the Federal
Circuit in Washington, which specializes in patent law, Cass
said.

“They should get to the Federal Circuit quickly and
hopefully get a reset on the case,” said John Dragseth, a
patent lawyer with Fish & Richardson in Minneapolis. “They have
to show not only the judge got it wrong, there’s an honest
explanation of all of this.”